Friday, January 5, 2018

Screwing Trump: NY May Scrap Its Income Tax for a Payroll Tax

The state of New York may end its income tax and instead expand its payroll tax as a way to outmaneuver the new federal law that limits deductions for state and local taxes, according to WGRZ.

New York Gov. Andrew Cuomo said Wednesday during his State of the State address that he is exploring how to make the switch. California and New Jersey leaders have also discussed similar steps and other alternatives.

Under the proposed Cuomo scheme, state income taxes would end and be replaced with a payroll tax which would have employers essentially collect the same amount of revenue in payroll taxes from employees, which would be tax deductible for the firms in full versus President Trump's cap put on tax deductibility of state income taxes on individual federal tax forms.

This is a minor positive in that it would cut the amount of tax that would go to the federal government. but a lowering of state taxes would be even better---something that is not going to happen. Further, since there is no indication the federal government is going to reduce spending, a reduction in federal tax revenue would only mean greater borrowing by the federal government. Thus amounting to only a switch in the way the federal government would drain funds from the economy.

Bottom line: Neither Trump nor Cuomo have any plan to shrink government. For both of them, it is only about shifting the manner in which funds are drained.

2 comments:

What an empty threat and a joke. People could then live in NYC and enjoy its wonders and no longer count the number of days in-state for residency. Because before if you were deemed a NYC resident your worldwide income would be subject to NY income taxes. But under this proposal anyone could live off non-NY company income or investment income live in the city and pay no tax. Just don't contribute to the NYC economy by working there or starting a business or hiring anyone in NYC. Economic production in NYC of course will be taxed under this.